Canada Emergency Business Account
On April 9, 2020, the government announced that small businesses and not-for-profit organizations can apply for support from the Canada Emergency Business Account through their banks and credit unions.
- CEBA will provide qualifying businesses and not-for-profit organizations a loan of up to $40,000 to help cover their operating costs during a period where their revenues have been temporarily reduced, due to the economic impacts of the COVID-19 virus.
- No interest or principal repayments are required until December 31, 2022.
- If at least 75% of the loan is repaid by December 31, 2022, then the financial institution will forgive the remaining balance of the loan.
- Therefore, on a $40,000 loan up to $10,000 of the loan will be eligible for loan forgiveness if $30,000 is fully repaid on or before December 31, 2022.
- If the loan is not repaid by December 31, 2022, the remaining balance will be converted to a three-year term loan at 5 per cent interest.
- The loan can be repaid at any time without penalty and no principal payments are required until December 31, 2025 when the full amount of the loan is due.
Businesses and not-for-profits will be eligible to apply for this loan if they have:
- A Canadian operating business in operation as of March 1, 2020
- Annual payroll of between $50,000 and $1 million as reported in box 14 of the organization’s 2019 T4 Summary of Remuneration Paid (T4SUM)
- An active business bank account with a primary financial institution that was opened on or before March 1, 2020
Applications are being processed online, through the financial institution through which you perform your business banking. To apply, you will require your business’ T4SUM for 2019 and your CRA business number.
Funds from the loan can only be used by the borrower to pay non-deferrable operating expenses of the borrower including, without limitation, payroll, rent, utilities, insurance, property tax and regularly scheduled debt service.
The funds may not be used to fund any payments or expenses such as prepayment/refinancing of existing indebtedness, payments of dividends, distributions and increases in management compensation.
To read more click the link below.
Click here to read the announcement.